January 2, 2013 | By Tekoa Da Silva
Two important things occurred in the gold and silver market over last handful of trading days. Firstly, the CME lowered gold margins by nearly 10%. This was released on Dec. 28th, which by today’s standards of online publishing is already Medieval History.
The second important event, is happening right now. The HUI is breaking out of it’s downtrend (hat-tip to Gary Savage’s Smart Money Tracker), and appears to be continuing it’s breakout today as shown below:
Now, as I published on Dec. 27th, I had a fascinating conversation with a major silver producer, who indicated the company has been seeing strong volumes of telephone calls from mutual funds, pension funds, hedge funds, and value/growth funds, due to the low multiples of mining equities.
When we contrast these pieces of market evidence against the backdrop of incredibly poor market sentiment, exhausting December tax-loss/capitulation selling, and a brutal, painful, and persistent bear market in resource shares since August 2011…I think it’s safe to say we’re setting up for one hell of a move higher in mining shares.
The match to get the fire started may be the drop in gold futures margins, combined with 2012 tax-loss sellers rolling positions back into the market.
That’s all for now.
Tekoa Da Silva
Bull Market Thinking